The extent of the hypoxic area in the Baltic Sea has rapidly expanded over the past century. Two previous phases of widespread hypoxia, coinciding with the Holocene Thermal Maximum (HTM; 8–4 ka before present; BP) and the Medieval Climate Anomaly (MCA; 2–0.8 ka BP), have been identified. Relatively little is known about bottom water redox conditions in the coastal zone of the Baltic Sea during the Holocene, however. Here we studied the geochemical composition of a sediment sequence from a currently seasonally hypoxic site in the Danish coastal zone, the Little Belt, retrieved during Integrated Ocean Drilling Program Expedition 347 (Site M0059). The base of the studied sediment sequence consists of clays low in organic carbon (Corg), molybdenum (Mo) and iron sulfides (Fe-sulfides), and rich in iron oxides (Fe-oxides), indicative of a well-oxygenated, oligotrophic (glacial) meltwater lake. An erosional unconformity separates the glacial lake sediments from sediments that are rich in Corg. The absence of Mo, in combination with high Corg/S values, indicates that these sediments were deposited in a highly productive, well-oxygenated freshwater lake. The transition to modern brackish/marine conditions was very rapid, and subsequent continuous sequestration of Mo in the sediment and high ratios of reactive iron (FeHR) over total Fe (FeTOT) suggest (seasonal) hypoxia occurred over the last ~ 8 ka. Maxima in sediment Corg, Mo and FeHR/FeTOT ratios during the HTM and MCA suggest that the hypoxia intensified. Our results demonstrate that the Little Belt is naturally susceptible to the development of seasonal hypoxia. While periods of climatic warming led to increased deoxygenation of bottom waters, high nutrient availability in combination with density stratification were likely the main drivers of hypoxia in this part of the coastal zone of the Baltic Sea during the Holocene.